“Our results in 2020 have continued to demonstrate the strength of our business and the superior capabilities of our team,” said Jonathan Sandelman, CEO of Ayr Strategies. “Although cannabis has been deemed an ‘essential business’, the regulators in Massachusetts and Nevada, where we currently operate, were among the few nationwide to place material restrictions on cannabis sales. So unlike many cannabis companies in the U.S., our business faced headwinds.”

“Despite these limitations, in the first quarter we produced sequentially higher revenue and substantial adjusted EBITDA, and added material cash from operations to our balance sheet,” continued Sandelman. “Since then, we have successfully accelerated our digital transformation initiatives, and we expect to exit the challenges presented by COVID a materially stronger business, as evidenced by the rebound in ticket size, transaction volume and retail margins we are seeing thus far in May.

“However, given the disruption caused by COVID, and the uncertainty around the pandemic’s ultimate impact on our markets and the regulatory environment, our prior revenue and adjusted EBITDA guidance for 2020 can no longer apply. Even though COVID has delayed some of our initiatives, we are confident that we will deliver strong revenue and adjusted EBITDA growth over the prior year.”

Q1 Financial Highlights

Revenue: Total revenue increased 4% to $33.6 million compared to $32.3 million in Q4 2019, driven through early March by higher retail sales in Nevada and higher wholesale revenues in Massachusetts. Revenues declined beginning in mid-March due to COVID-related closures and began to rebound in Q2

Gross Profit1: Gross profit increased 10% to $16.6 million compared to $15.1 million in Q4 2019

Adjusted EBITDA: Adjusted EBITDA was $8.4 million compared to $9.2 million in Q4 2019, as March expenses decreased at a slower pace than revenues, which declined due to COVID-related closures

Loss from Operations: Loss from operations improved to $4.9 million compared to $16.9 million in Q4 2019

Cash Flow from Operations: Cash generated by operating activities increased 85% to $7.4 million compared to $4.0 million in Q4 2019

Balance Sheet: At March 31, 2020, cash and cash equivalents was $9.9 million, an 18% increase compared to $8.4 million of cash and cash equivalents at December 31, 2019

“Through early March, our business was performing well above the record pace we set in the fourth quarter of 2019,” continued Sandelman. “Had regulators not restricted our businesses in mid-March, total revenue and adjusted EBITDA would have been up nearly 16% and 10% quarter-over-quarter, respectively.

“In Q2, we are pleased to have continued to produce positive adjusted EBITDA and cash flow from operations in both April and May to date, despite the COVID shutdowns. In fact, because of the improvements made to our business model in April, for those business areas currently open (only our Massachusetts wholesale business is closed) May is pacing to produce more adjusted EBITDA than our prior monthly records in January and February 2020. Given that regulators announced on Monday that Massachusetts adult use sales can commence again next week, we anticipate returning to Q1 levels of adjusted EBITDA or better beginning in June.”

Operational Highlights

As a reminder, Nevada regulators limited all cannabis sales to delivery-only beginning March 21, 2020, with curbside pick-up approved on May 1st and in-store sales on May 9th. In Massachusetts, regulators restricted adult use cannabis sales beginning March 24, 2020, with adult use curbside pick-up scheduled to re-commence on May 25th.

Nevada May to Date Retail

Average daily revenues are currently over $200k; daily transaction volumes over 2,400, with average ticket of $84 per transaction; estimated gross margin levels just under 60%

We have retooled our technology, rapidly implemented new software and an e-commerce oriented website, and launched digital marketing campaigns to support online sales

As a result of these business initiatives, May adjusted EBITDA in the state is tracking 3% above the record months of January and February 2020 despite lower revenues

Massachusetts May to Date Retail

Average daily revenues are currently over $59k; daily transaction volumes over 300, with average ticket of $186 per transaction; estimated gross margin levels in the low 60% range

As a result, May dispensary revenues are tracking to over $1.8 million, 90% above January and February 2020 levels

Cultivation Expansions

In Massachusetts, we have completed four harvests to date from our cultivation expansion, resulting in strong inventories available to address pent-up demand when adult use sales are expected to resume May 25

Massachusetts cultivation expansion is expected to double wholesale capacity from the $2.5 million monthly average in Q1 and is expected to improve gross margins in the state from the low 60% range in Q1 to approximately 70% in Q2 and beyond

In Nevada, product from our cultivation expansion is expected to arrive in stores in June, allowing for internally sourced product to increase from 25% in Q1 up to 50% in Q2

Nevada gross margin is expected to increase as a result, from 45% in Q1 to approximately 60% in Q2

“Over the weeks following the COVID closures, we streamlined and improved our business. In Nevada, prior to COVID, growth from our existing dispensary footprint was limited by transaction capacity. Today, with Ayr generating higher levels of adjusted EBITDA on fewer transactions, we estimate our adjusted EBITDA capacity has increased 35% in the state, assuming we can reach pre-COVID revenue at these margin levels,” said Mr. Sandelman.

“In Massachusetts, the excellent results being generated from our newest cultivation facility put us in a position to address the wholesale market with more than double our prior capacity. In terms of our Massachusetts retail operations, we entered 2020 expecting one of our current medical dispensaries to open for adult use sales in May, and two more in September; and in supplement to these, in February we secured an alternate adult-use license in a favorable greater Boston town. However, COVID has closed local governments in Massachusetts and delayed approvals for these adult use dispensary conversions by several months, if not more. While we are disappointed at the COVID-related delays in converting to adult-use sales in our dispensaries, we are confident that our high density, high traffic greater Boston locations will result in persistently strong retail sales opportunities when our stores convert to adult use.

“As a management team, we work tirelessly to exceed expectations on what we can control, and to mitigate what we can’t. We will continue to execute on our strategy and seek to operate at the highest levels, and the strong foundation and culture we have created at Ayr is expected to pay off as we further expand in 2020.

“I want to highlight how impressively the men and women on our team have pulled together to reshape our company through COVID. Looking forward, it is this strong culture that we believe will differentiate us from our competitors.”

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.

The conference call will be broadcast live and available for replay here.

A telephonic replay of the conference call will also be available after 11:30 a.m. Eastern time on the same day through May 28, 2020.

Certain financial information reported in this news release is extracted from Ayr’s financial statements as at and for the three month period ended March 31, 2020. These results presented herein are preliminary and subject to change. Ayr will file its interim financial statements on SEDAR shortly. All such financial information contained in this news release is qualified in its entirety by reference to such financial statements.

Definition and Reconciliation of Non-IFRS Measures

The Company reports certain non-IFRS measures that are used to evaluate the performance of its businesses and the performance of their respective segments, as well as to manage their capital structures. As non-IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulators require such measures to be clearly defined and reconciled with their most comparable IFRS measure.

The Company references non-IFRS measures and cannabis industry metrics in this document and elsewhere. Non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these are provided as additional information to complement those IFRS measures by providing further understanding of the results of the operations of the Company from management’s perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company’s financial information reported under IFRS. Non-IFRS measures used to analyze the performance of the Company’s businesses include “adjusted EBITDA” and “adjusted gross profit”.

The Company believes that these non-IFRS financial measures provide meaningful supplemental information regarding the Company’s performances and may be useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. These financial measures are intended to provide investors with supplemental measures of the Company’s operating performances and thus highlight trends in the Company’s core businesses that may not otherwise be apparent when solely relying on the IFRS measures.

Adjusted EBITDA

“Adjusted EBITDA” represents income (loss) from operations, as reported, before interest and tax, adjusted to exclude extraordinary items, non-recurring items, other non-cash items, including stock-based compensation expense, depreciation and amortization, the adjustments for the accounting of the fair value of biological assets and the incremental costs to acquire cannabis inventory in a business combination, and further adjusted to remove acquisition related costs.

Adjusted Gross Profit

“Adjusted gross profit” represents the gross profit, as reported, adjusted to exclude the accounting for the fair value of biological assets and the incremental costs to acquire cannabis inventory in a business combination.

A reconciliation of how Ayr calculates adjusted EBITDA is provided below. Additional reconciliations of adjusted EBITDA and other disclosures concerning non-IFRS measures will be provided in our MD&A for the 3 months ended March 31, 2020. For a reconciliation of how Ayr calculates adjusted gross profit refer to the MD&A for the three months and year-end December 31, 2019. As well, the Company reminds you that adjusted EBITDA and adjusted gross profit are non-IFRS measures.

Forward-Looking Statements

Certain information contained in this news release may be forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are often, but not always, identified by the use of words such as “target”, “expect”, “anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “outlook”, “intend”, “plan”, “seek”, “will”, “may”, “tracking”, “pacing” and “should” and similar expressions or words suggesting future outcomes. This news release includes forward-looking information and statements pertaining to, among other things, Ayr’s future growth plans. Numerous risks and uncertainties could cause the actual events and results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking statements, including, but not limited to: anticipated strategic, operational and competitive benefits may not be realized; events or series of events may cause business interruptions; required regulatory approvals may not be obtained; acquisitions may not be able to be completed on satisfactory terms or at all; and Ayr may not be able to raise additional capital. Among other things, Ayr has assumed that its businesses will operate as anticipated, that it will be able to complete acquisitions on reasonable terms, and that all required regulatory approvals will be obtained on satisfactory terms and within expected time frames.

2020 estimates and assumptions involve known and unknown risks and uncertainties that may cause actual results to differ materially. While Ayr believes there is a reasonable basis for these assumptions, such estimates may not be met. These estimates represent forward-looking information. Actual results may vary and differ materially from the estimates.

Assumptions

Forward-looking information in this subject to the assumptions and risks as described in our MD&A for March 31, 2020. For more information about the Company’s 2020 operations and outlook, please view Ayr’s corporate presentation posted in the Investors section of the Company’s website at www.ayrstrategies.com. As well, we remind you that adjusted EBITDA and adjusted gross profit are non-IFRS measures. Additional reconciliations and other disclosures concerning non-IFRS measures will be provided in our MD&A for the 3 months ended March 31, 2020.

About Ayr Strategies Inc.

Ayr Strategies (“Ayr”) is an expanding vertically integrated, U.S. multi-state cannabis operator, focusing on high-growth markets. With anchor operations in Massachusetts and Nevada, the company cultivates and manufactures branded cannabis products for distribution through its network of retail outlets and through third-party stores. Ayr strives to enrich and enliven consumers’ experience every day – helping them to live their best lives, elevated.

Ayr’s leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrstrategies.com.

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.

The conference call will be broadcast live and available for replay here.

A telephonic replay of the conference call will also be available after 11:30 a.m. Eastern time on the same day through May 28, 2020.

About Ayr Strategies Inc.Ayr Strategies (“Ayr”) is an expanding vertically integrated, U.S. multi-state cannabis operator, focusing on high-growth markets. With anchor operations in Massachusetts and Nevada, the company cultivates and manufactures branded cannabis products for distribution through its network of retail outlets and through third-party stores. Ayr strives to enrich and enliven consumers’ experience every day – helping them to live their best lives, elevated.

Ayr’s leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrstrategies.com.

“As the regulatory response to COVID-19 continues to evolve, we are pleased to have positive developments to share regarding our business in Nevada,” said Ayr CEO Jon Sandelman. “The introduction of curbside pick-up on May 1st has enabled daily revenue run rates that allow us to reach our pre-COVID adjusted EBITDA levels. This is a huge milestone, and adds to the already strong cash position on our balance sheet.

“In the first four days of curbside pick-up, our Nevada dispensaries fulfilled over 5,700 curbside orders. Since curbside commenced on Friday, May 1st, the pace of weekly revenue growth has increased to 45% from the 40% we experienced in April. Our flexible technology has allowed for seamless deployment, with average daily sales increasing to more than $200k with 2,000 daily transactions between delivery and pick-up.

“Customers clearly prefer pick-up to delivery – we’ve seen our mix shift to two-thirds or more at curbside since the start of the month. Curbside has the added benefit of being significantly more scalable with lower operating expenses than delivery. For comparison, we have the ability to fulfill five times as many orders per hour at pick-up compared to the volumes we’re able to achieve through delivery.”

Sandelman continued: “We previously estimated that by achieving $190k in daily sales we would reach our pre-COVID adjusted EBITDA level for the state, and with curbside we are pacing comfortably at or above those levels, given we are already averaging more than $200k. Our team continues to adapt to the changing business landscape incredibly well, keeping our customers, our team and our community safe while providing the vital wellness products our clients need.”

Nevada Curbside Metrics

Run rate adjusted EBITDA now at pre-COVID levels for Nevada

Daily sales averaging more than $200k with curbside pick-up, with 2,000 average daily transactions

Currently two thirds of daily transactions are fulfilled at curbside

Average tickets remain elevated, most recently $133 for delivery and $88 for curbside

Curbside is significantly more scalable than delivery, with the ability to fulfill five times as many orders per hour at pick-up compared to delivery

“In late April we began preparing for our stores to reopen – including the potential for curbside pick-up,” said Sandelman. “We foresaw potential for a shift in purchasing behavior for buying cannabis, and we are pleased that our advance preparations have put us in an advantageous position to capitalize on this dynamic environment.”

Non-IFRS MeasuresThe Company reports certain non-IFRS measures that are used to evaluate the performance of its businesses and the performance of their respective segments, as well as to manage their capital structures. As non-IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulators require such measures to be clearly defined and reconciled with their most comparable IFRS measure.

The Company references non-IFRS measures and cannabis industry metrics in this document and elsewhere. Non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these are provided as additional information to complement those IFRS measures by providing further understanding of the results of the operations of the Company from management’s perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company’s financial information reported under IFRS. Non-IFRS measures used to analyze the performance of the Company’s businesses include “Adjusted EBITDA” and “Adjusted Gross Profit”.

For a reconciliation of Adjusted EBITDA to IFRS measures please see our MD&A for the 3 months and year ended December 31, 2019.

Forward-looking statementsCertain information contained in this news release may be forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are often, but not always, identified by the use of words such as “target”, “expect”, “anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “outlook”, “intend”, “plan”, “seek”, “will”, “may” and “should” and similar expressions or words suggesting future outcomes. This news release includes forward-looking information and statements pertaining to, among other things, Ayr’s future growth plans. Numerous risks and uncertainties could cause the actual events and results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking statements, including, but not limited to: the impact of the COVID-19 virus; anticipated strategic, operational and competitive benefits may not be realized; events or series of events may cause business interruptions; required regulatory approvals may not be obtained; acquisitions may not be able to be completed on satisfactory terms or at all; and Ayr may not be able to raise additional capital. Among other things, Ayr has assumed that its businesses will operate as anticipated, that it will be able to complete acquisitions on reasonable terms, and that all required regulatory approvals will be obtained on satisfactory terms and within expected time frames.

About Ayr StrategiesAyr Strategies (“Ayr”) is an expanding vertically integrated, U.S. multi-state cannabis operator, focusing on high-growth markets. With anchor operations in Massachusetts and Nevada, the company cultivates and manufactures branded cannabis products for distribution through its network of retail outlets and through third-party stores. Ayr strives to enrich and enliven consumers’ experience every day – helping them to live their best lives, elevated.

Ayr’s leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrstrategies.com.

TORONTO, April 22, 2020 (GLOBE NEWSWIRE) -- Ayr Strategies Inc. (CSE: AYR.A, OTCQX: AYRSF) (“Ayr”), a vertically-integrated cannabis multi-state operator (MSO) with a presence in the western and eastern U.S., is providing an update on the company’s operations in response to ongoing COVID-19 developments. Unless otherwise noted, all results are presented in U.S. dollars.

“Despite regulators putting material restrictions on cannabis sales in both Massachusetts and Nevada in response to COVID-19, in the last 30 days, we have pivoted our businesses and continue to produce positive adjusted EBITDA for the month of April to date, adding to the already strong cash position on our balance sheet,” said Ayr CEO Jon Sandelman.

Nevada

“Our business in Nevada continued to generate positive adjusted EBITDA following the COVID-19 regulatory restrictions applied to cannabis businesses in the state,” continued Sandelman. “We have built what we believe to be the largest cannabis delivery network in Nevada, deploying more than 50 delivery vehicles, completing up to 1,200 daily deliveries with average tickets of up to $139 (versus $61 average ticket pre-COVID). We are seeing 40% average weekly revenue growth, achieving daily sales of up to $169k at gross margins 20 percentage points higher than pre-COVID levels. We project that by achieving $190k in daily sales, we would reach our pre-COVID adjusted EBITDA level for the state.”

Nevada Key Metrics

Positive adjusted EBITDA for April to date and 2020 year to date

Completing up to 1,200 delivery transactions per day with more than 50 delivery vehicles

Average ticket as high as $139 since implementing delivery model, up from $61 pre-COVID

Weekly average revenue growth over 40% since the start of home delivery

Gross margins expanded 20 percentage points from pre-COVID levels

Achieved daily revenues as high as $169k, and at $190k in daily revenue, expected to reach pre-COVID adjusted EBITDA levels

“Now that our delivery business is in great shape, we are actively preparing for the day when our stores reopen – potentially with curbside pickup and drive-through options, and we expect to continue providing delivery services given the attractive economics. We believe there may be a shift in purchasing behavior throughout the country as customers utilize these alternative methods to buy cannabis, and we will be prepared to serve our customers in the manner they wish to shop.”

Massachusetts

Sandelman continued: “In Massachusetts, our dispensary revenues are up 40% from pre-COVID levels, with average ticket sizes increasing from $140 pre-COVID to up to $225 per transaction today. We are pioneering new ways to serve our customers, offering home delivery to the greater Boston area as of yesterday, in addition to being the only dispensary in greater Boston to implement curbside pick-up.

“Beyond our retail business, our cultivation and production business remains very strong. Since mid-March, we have had two successful harvests in our new 19,000 ft² cultivation facility, and our total annual cultivation capacity sits at 20,000 lbs. We believe demand for Massachusetts cannabis will be substantial when quarantines are lifted in the state, and with our expanded cultivation capacity we are in an excellent position to benefit from that demand.”

Non-IFRS MeasuresThe Company reports certain non-IFRS measures that are used to evaluate the performance of its businesses and the performance of their respective segments, as well as to manage their capital structures. As non-IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulators require such measures to be clearly defined and reconciled with their most comparable IFRS measure.

The Company references non-IFRS measures and cannabis industry metrics in this document and elsewhere. Non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these are provided as additional information to complement those IFRS measures by providing further understanding of the results of the operations of the Company from management’s perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company’s financial information reported under IFRS. Non-IFRS measures used to analyze the performance of the Company’s businesses include “Adjusted EBITDA” and “Adjusted Gross Profit”.

For a reconciliation of Adjusted EBITDA to IFRS measures please see our MD&A for the 3 months and year ended December 31, 2019.

Forward-looking statementsCertain information contained in this news release may be forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are often, but not always, identified by the use of words such as “target”, “expect”, “anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “outlook”, “intend”, “plan”, “seek”, “will”, “may” and “should” and similar expressions or words suggesting future outcomes. This news release includes forward-looking information and statements pertaining to, among other things, Ayr’s future growth plans. Numerous risks and uncertainties could cause the actual events and results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking statements, including, but not limited to: the impact of the COVID-19 virus; anticipated strategic, operational and competitive benefits may not be realized; events or series of events may cause business interruptions; required regulatory approvals may not be obtained; acquisitions may not be able to be completed on satisfactory terms or at all; and Ayr may not be able to raise additional capital. Among other things, Ayr has assumed that its businesses will operate as anticipated, that it will be able to complete acquisitions on reasonable terms, and that all required regulatory approvals will be obtained on satisfactory terms and within expected time frames.

About Ayr StrategiesAyr Strategies (“Ayr”) is an expanding vertically integrated, U.S. multi-state cannabis operator, focusing on high-growth markets. With anchor operations in Massachusetts and Nevada, the company cultivates and manufactures branded cannabis products for distribution through its network of retail outlets and through third-party stores. Ayr strives to enrich and enliven consumers’ experience every day – helping them to live their best lives, elevated.

Ayr’s leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrstrategies.com.

“Our cultivation, manufacturing and retail businesses have been deemed essential services in each state where we operate,” said Ayr CEO Jonathan Sandelman. “This designation allows us to continue meeting the needs of our customers, which have only increased in response to COVID-19. As the current environment evolves daily, our operational teams are expanding business practices to ensure we are appropriately responding and serving the vital health and wellness needs of our customers.

“Ayr’s Nevada stores remain open for both medical and adult-use customers via delivery, which is a very attractive fulfillment model for us. In Massachusetts, our stores remain open for medical patients, with adult-use sales suspended for the two weeks from March 24th through April 7th.

“All market data and anecdotal indications we have seen demonstrate that patients and consumers want cannabis more than ever. Our team remains committed to meeting our patients’ health and wellness needs as they cope with heightened anxiety, insomnia and other factors resulting from the COVID-19 pandemic.”

NevadaSpeaking on Ayr’s Nevada operations, Sandelman commented: “In Nevada, we have delivery licenses in Clark County (Las Vegas area) and Washoe County (Reno area), and one of only three licenses in Henderson, Nevada’s second largest city. This provides us with the ability to deliver to customers anywhere within these regions.

“We also have the necessary logistics and systems in place to support our transition to delivery. This week, we have secured over 35 vehicles to expedite our delivery program, and we aim to transfer as many of our 250 dispensary employees as possible to new roles supporting this business. On the back-end, we have implemented fulfillment software to convert our online ordering system to a delivery portal. Our e-commerce technology is being enhanced to allow maximum operational flexibility and to be in complete control of our logistics. Additionally, we are maintaining our relationship with Blackbird, Nevada’s largest delivery service, which will continue to fulfill a portion of our deliveries.

“The delivery business model is powerful. Our average ticket size of delivery orders has been more than double the average ticket within our brick and mortar stores. Although it is still early, through our tiered delivery options—which allow customers to access lower fees and minimum purchase sizes for advance orders versus premium same day deliveries—we have the potential to generate significant revenue on an attractive cost base given the strong consumer demand. We also believe we can tailor our product mix to favor internally sourced items and further increase delivery margins. As a result, we may retain delivery as a key component of our Nevada operations even after our dispensaries reopen.”

MassachusettsSandelman continued: “In addition to the state designating medical cannabis as an essential service, Massachusetts regulators have accelerated access to medical cards, as many patients stopped renewing their cards after recreational sales began. To expand our patients’ access to the products they need, we have extended a program offering discounts of up to 50% off the cost of medical cards.

“Medical dispensaries across the state, including ours, have seen sales increase throughout March as a result of increased patient demand. Average ticket sizes in our dispensaries have increased 30% relative to the average ticket in January and February.

“We believe consumer demand will only increase when the pause in recreational sales expires on April 7th, as we anticipate the potential for significant pent-up demand to come back into the market. In the meantime, we have shifted our wholesale focus to medical dispensaries that may not have sufficient supply to meet the rapid increase in medical demand. As an extension of this priority, we are in the process of requesting expedited approval for a delivery license out of our Somerville dispensary, which would help us further ensure that our products can reach our patients.

“From a product standpoint, our expanded Massachusetts cultivation capacity, ‘M2,’ had its first harvest in mid-March. Product from M2 is expected to be ready for market a few weeks after the expected resumption of recreational cannabis sales in April. Should recreational sales remain suspended for a longer period, our cannabis flower can be stored for 12 months or more under appropriate conditions, and even longer for extracted products.

“The response by patients in Massachusetts gives us an even more positive outlook for our business in the state beyond current COVID-19 conditions. We are working to meet the state’s robust consumer demand within our current constraints, and we are proud of our team’s dedication to expanding the accessibility of our products.”

Forward-looking statementsCertain information contained in this news release may be forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are often, but not always, identified by the use of words such as “target”, “expect”, “anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “outlook”, “intend”, “plan”, “seek”, “will”, “may” and “should” and similar expressions or words suggesting future outcomes. This news release includes forward-looking information and statements pertaining to, among other things, Ayr’s future growth plans. Numerous risks and uncertainties could cause the actual events and results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking statements, including, but not limited to: the impact of the COVID-19 virus; anticipated strategic, operational and competitive benefits may not be realized; events or series of events may cause business interruptions; required regulatory approvals may not be obtained; acquisitions may not be able to be completed on satisfactory terms or at all; and Ayr may not be able to raise additional capital. Among other things, Ayr has assumed that its businesses will operate as anticipated, that it will be able to complete acquisitions on reasonable terms, and that all required regulatory approvals will be obtained on satisfactory terms and within expected time frames.

About Ayr StrategiesAyr Strategies (“Ayr”) is an expanding vertically integrated, U.S. multi-state cannabis operator, focusing on high-growth markets. With anchor operations in Massachusetts and Nevada, the company cultivates and manufactures branded cannabis products for distribution through its network of retail outlets and through third-party stores. Ayr strives to enrich and enliven consumers’ experience every day – helping them to live their best lives, elevated.

Ayr’s leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrstrategies.com.

“We are pleased to release our audited financial statements at this early date, which speaks to the strength of our people and the robust operational and control framework we established in 2019,” said Ayr CEO Jonathan Sandelman. “Today, we have the personnel, systems and processes in place to build upon the foundation we laid over the past year. Our substantial organic growth plans are fully funded, and we have every expectation of capitalizing on M&A opportunities, which are only becoming more attractive.

“We remain on track to begin sales from our recently expanded cultivation in Massachusetts and Nevada, where we more than doubled our canopy from 27,000 square feet to 63,000 square feet. Combined with our strong balance sheet and ongoing cash flow generation, we are well-positioned to deliver strong growth in 2020.”

Forward-looking statementsCertain information contained in this news release may be forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are often, but not always, identified by the use of words such as “target”, “expect”, “anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “outlook”, “intend”, “plan”, “seek”, “will”, “may” and “should” and similar expressions or words suggesting future outcomes. This news release includes forward-looking information and statements pertaining to, among other things, Ayr’s future growth plans. Numerous risks and uncertainties could cause the actual events and results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking statements, including, but not limited to: the impact of the COVID-19 virus; anticipated strategic, operational and competitive benefits may not be realized; events or series of events may cause business interruptions; required regulatory approvals may not be obtained; acquisitions may not be able to be completed on satisfactory terms or at all; and Ayr may not be able to raise additional capital. Among other things, Ayr has assumed that its businesses will operate as anticipated, that it will be able to complete acquisitions on reasonable terms, and that all required regulatory approvals will be obtained on satisfactory terms and within expected time frames.

About Ayr StrategiesAyr Strategies (“Ayr”) is an expanding vertically integrated, U.S. multi-state cannabis operator, focusing on high-growth markets. With anchor operations in Massachusetts and Nevada, the company cultivates and manufactures branded cannabis products for distribution through its network of retail outlets and through third-party stores. Ayr strives to enrich and enliven consumers’ experience every day – helping them to live their best lives, elevated.

Ayr’s leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrstrategies.com.

Source: Ayr Strategies Inc.
]]>Ayr Strategies Provides Business Update in Response to COVID-19https://ir.ayrstrategies.com/news-events/press-releases/detail/32/ayr-strategies-provides-business-update-in-response-to
Fri, 20 Mar 2020 13:45:00 -0400https://ir.ayrstrategies.com/news-events/press-releases/detail/32/ayr-strategies-provides-business-update-in-response-toTORONTO, March 20, 2020 (GLOBE NEWSWIRE) -- Ayr Strategies Inc. (CSE: AYR.A, OTCQX: AYRSF) (“Ayr”), a vertically-integrated cannabis multi-state operator (MSO) with a presence in the western and eastern U.S., is providing an update on its safety and operational response to COVID-19. The health and well-being of Ayr’s employees, customers, and the communities it serves continue to be the Company’s top priority.

“We are monitoring this challenging situation in real-time and seeking to follow all health and hygiene protocols released by the CDC, as well as by state and local health authorities,” said Jonathan Sandelman, CEO of Ayr Strategies. “In addition, we are in ongoing communication with our employees and customers to seek to ensure they are taking the necessary precautions to protect their own health and the health of those around them.

“As numerous industry reports have cited, consumer demand for cannabis products has accelerated in recent weeks and we thank our team for their excellent efforts to meet the increasing needs of our patients. Given our excellent operational team, our strong balance sheet and monthly cash flow generation, we believe that we have the foundation and resources to bring us through this period of uncertainty.”

Ayr has already implemented multiple proactive measures to help minimize exposure to COVID-19 in its facilities and dispensaries. These measures include, but are not limited to:

Extensive health and safety training for Company staff, seeking to incorporate best practices as recommended by the CDC, such as seeking to strictly adhere to social distancing protocols, wear protective clothing and engage in heightened regular cleaning;

Increased social distancing practices to seek to ensure the health and safety of staff and customers, including options for low contact fulfillment where regulations allow, such as online ordering, smart wait-lists to eliminate lines, express pick-up, and delivery where permitted, in addition to traditional dispensary services;

Daily health checks of Company employees for flu-like symptoms, including fever, cough, and headaches; and

Expanded Company sick leave policy, as announced earlier this week.

Sandelman continued: “Across our portfolio, we will continue to seek to ensure that our customers and patients have access to the cannabis products they need to manage their health and wellness. Cannabis is an integral part of our patients’ care and our cannabis dispensaries exist first and foremost to address those needs. Consistent with this, to date, many states and local authorities have designated cannabis dispensaries as ‘essential’ businesses that should remain open.

All of our facilities remain open and we will continue to seek to maintain the optimal safety, quality and continuity of our operations to serve the needs of our customers and patients in this difficult time.”

Forward-Looking StatementsCertain information contained in this news release may be forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are often, but not always, identified by the use of words such as “target”, “expect”, “anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “outlook”, “intend”, “plan”, “seek”, “will”, “may” and “should” and similar expressions or words suggesting future outcomes. This news release includes forward-looking information and statements pertaining to, among other things, Ayr’s future performance. Numerous risks and uncertainties could cause the actual events and results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking statements, including, but not limited to: a worsening of the COVID-19 pandemic; changes in governmental or customer responses to the COVID-19 outbreak; continued availability of required employees; access to retail locations; business interruptions;; and access to needed supplies or capital. Among other things, Ayr has assumed that its businesses will be able to continue to operate.

About Ayr StrategiesAyr Strategies (“Ayr”) is an expanding vertically integrated, U.S. multi-state cannabis operator, focusing on high-growth markets. With anchor operations in Massachusetts and Nevada, the company cultivates and manufactures branded cannabis products for distribution through its network of retail outlets and through third-party stores. Ayr strives to enrich and enliven consumers’ experience every day – helping them to live their best lives, elevated.

Ayr’s leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrstrategies.com.

Source: Ayr Strategies Inc.
]]>In Response to COVID-19, Ayr Strategies Teams with the UFCW to Expand Paid Leave to Ensure the Well-Being of its Employees, Customers and Communitieshttps://ir.ayrstrategies.com/news-events/press-releases/detail/30/in-response-to-covid-19-ayr-strategies-teams-with-the-ufcw
Mon, 16 Mar 2020 08:30:00 -0400https://ir.ayrstrategies.com/news-events/press-releases/detail/30/in-response-to-covid-19-ayr-strategies-teams-with-the-ufcwTORONTO, March 16, 2020 (GLOBE NEWSWIRE) -- Ayr Strategies Inc. (CSE: AYR.A, OTCQX: AYRSF) (“Ayr”), a vertically-integrated cannabis multi-state operator (MSO) with a presence in the western and eastern U.S., joined with the United Food and Commercial Workers International Union (UFCW) in announcing measures to safeguard the health of its employees and customers amid the Coronavirus (COVID-19) outbreak.

Under the measures, Ayr employees will benefit from an expanded sick leave policy that allows for additional paid time off and sick leave for those dealing with the impacts of the COVID-19 virus.

“Our most precious assets are our employees and customers. We worked closely with the UFCW to develop and put in place all the necessary measures to ensure the well-being and safety of our employees, our customers and our communities,” said Jon Sandelman, CEO of Ayr Strategies. “We’re expanding our sick leave policy to ensure that employees’ concern about COVID-19 does not keep them from protecting their health or the safety of those around them.”

“We’re committed to working with employers like Ayr Strategies to ensure the health and welfare of our members and their communities. We are pleased to see Ayr take a proactive step forward in protecting its employees,” said Fernando Lemus, Secretary Treasurer and Acting President at UFCW.

Ayr continues to closely monitor all developments related to COVID-19 and is taking all necessary steps to mitigate risks for employees, including putting in place an ongoing communication program to provide updates within the office and facilities with protective measures, and health and hygiene protocols as they are being released by the CDC and state health authorities.

About Ayr Strategies

Ayr Strategies (“Ayr”) is an expanding vertically integrated, U.S. multi-state cannabis operator, focusing on high-growth markets. With anchor operations in Massachusetts and Nevada, the company cultivates and manufactures branded cannabis products for distribution through its network of retail outlets and through third-party stores. Ayr strives to enrich and enliven consumers’ experience every day – helping them to live their best lives, elevated.

Ayr’s leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrstrategies.com.

About the United Food and Commercial Workers International Union (UFCW)

The UFCW is the largest private sector union in the United States, representing 1.3 million professionals and their families in healthcare, grocery stores, meatpacking, food processing, retail shops and other industries. Our members serve our communities in all 50 states, Canada and Puerto Rico. Learn more about the UFCW at www.ufcw.org.

Source: Ayr Strategies Inc.]]>Ayr Strategies Expands Paid Leave to Benefit Employees and Communities in Response to COVID-19https://ir.ayrstrategies.com/news-events/press-releases/detail/29/ayr-strategies-expands-paid-leave-to-benefit-employees-and
Fri, 13 Mar 2020 17:48:00 -0400https://ir.ayrstrategies.com/news-events/press-releases/detail/29/ayr-strategies-expands-paid-leave-to-benefit-employees-andTORONTO, March 13, 2020 (GLOBE NEWSWIRE) -- Ayr Strategies Inc. (CSE: AYR.A, OTCQX: AYRSF) (“Ayr”), a vertically-integrated cannabis multi-state operator (MSO) with a presence in the western and eastern U.S., today joined with the United Food and Commercial Workers International Union (UFCW) in announcing measures to safeguard the health of its employees and customers amid the Coronavirus (COVID-19) outbreak.

Under the measures, Ayr employees will benefit from an expanded sick leave policy that allows for additional paid time off and sick leave for those dealing with the impacts of the COVID-19 virus.

“Our highest priority is the well-being and safety of our employees, our customers and the community,” said Jon Sandelman, CEO of Ayr Strategies. “We’re expanding our sick leave policy to ensure that employees’ concern about COVID-19 does not keep them from protecting their health or the safety of those around them.”

“We’re committed to working with employers like Ayr Strategies to ensure the health and welfare of our members and their communities. We are pleased to see Ayr take a proactive step forward in protecting its employees,” said Fernando Lemus, Secretary Treasurer and Acting President at UFCW.

Ayr continues to closely monitor all developments related to COVID-19 and taking steps to mitigate risks for employees, including disseminating information within the office and facilities with protective measures, and health and hygiene protocols.

About Ayr Strategies

Ayr Strategies (“Ayr”) is an expanding vertically integrated, U.S. multi-state cannabis operator, focusing on high-growth markets. With anchor operations in Massachusetts and Nevada, the company cultivates and manufactures branded cannabis products for distribution through its network of retail outlets and through third-party stores. Ayr strives to enrich and enliven consumers’ experience every day – helping them to live their best lives, elevated.

Ayr’s leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrstrategies.com.

About the United Food and Commercial Workers International Union (UFCW)

The UFCW is the largest private sector union in the United States, representing 1.3 million professionals and their families in healthcare, grocery stores, meatpacking, food processing, retail shops and other industries. Our members serve our communities in all 50 states, Canada and Puerto Rico. Learn more about the UFCW at www.ufcw.org.

TORONTO, Feb. 26, 2020 (GLOBE NEWSWIRE) -- Ayr Strategies Inc. (CSE: AYR.A, OTCQX: AYRSF) (“Ayr” or the “Company”), a vertically-integrated cannabis multi-state operator (MSO) with a presence in the western and eastern U.S., is reporting financial results for the three months and full year ended December 31, 2019.

Unless otherwise noted, all results are presented in U.S. dollars.

Annualized Full Year 2019 Financial Summary3 (vs. 2018)

Total revenue increased 75% to $124.2 million compared to $70.9 million.

Loss from operations was $16.9 million compared to $10.7 million, with the increase entirely resulting from non-cash charges.

Management Commentary

“In just seven months of combined operations, our business has thrived and we have delivered on the ambitious expectations that we laid out for our shareholders,” said Ayr CEO Jon Sandelman. “Our Nevada dispensaries have become the market and industry leader in terms of productivity, and our Massachusetts businesses continued to outperform despite multiple regulatory challenges.

“BDS Analytics ranks our dispensaries as the highest revenue generating stores among MSOs. In Nevada, our retail performance is stronger than ever with average annual revenue per dispensary of $17 million, with our top store generating nearly $26 million annually. We also consistently improved profitability across our Nevada portfolio in 2019 as we vertically integrated the four businesses we acquired, and our in-house brands are now accounting for approximately 27% of dispensary sales compared to 22% in Q3 and less than 3% at the start of 2019.

“In Massachusetts, we currently sell to more than two-thirds of all recreational dispensaries. In light of the Massachusetts vape ban in the fourth quarter, we pivoted our resources to make up the lost revenue and margin from vapes, and we were the first cannabis company back to market when the vape ban was lifted earlier than expected in December. Further, we rolled out several Nevada brands in Massachusetts during the quarter, and both customer feedback and initial sell-through have been very strong. All of this underscores the strength of our teams on the ground, which provide us operational leverage and flexibility that is essential in the cannabis industry.

“For 2020, our ambitious organic growth plans are fully funded. We have completed construction on our cultivation expansions in both Nevada and Massachusetts, and these expansions have more than doubled our capacity, taking our canopy from 27,000 square feet to 63,000 square feet. We are underway with our first grow cycles in these new facilities and expect sales from our initial harvests to begin in Q2 2020.

“Looking beyond these key growth drivers for 2020, we continue to target business combinations that can expand our initial portfolio and footprint; these combinations would add to our current 2020 financial outlook. The cannabis market environment continues to favor our strengths of financial discipline, cash flow generation and a fully funded growth strategy, and we have every expectation of capitalizing on attractive M&A opportunities in 2020.”

2020 Outlook

Ayr expects 2020 revenue to range between $207 million and $227 million, reflecting approximately 67% to 83% organic growth from 2019. The Company also expects adjusted EBITDA to range between $93 million and $103 million, reflecting approximately 170% to 199% organic growth from 2019.

For more information about the Company’s 2020 outlook, including detailed financial bridges outlining various growth initiatives, please view Ayr’s corporate presentation posted in the Investors section of the Company’s website at www.ayrstrategies.com.

1 Non-IFRS measure defined in “Definition and Reconciliation of Non-IFRS Measures” below.2 Includes data for October and November 2019; Nevada sales for December 2019 are unavailable. 3 Due to the qualifying transaction completed on May 24, 2019, the 2019 annual results have been normalized by taking the 221-day period and annualizing it to produce a full year of results, whereas the 2018 results represent pro forma consolidated results as reported in the Company’s Business Acquisition Report filed on August 7, 2019.

Conference Call

Ayr CEO Jonathan Sandelman, CFO Brad Asher and COO Jennifer Drake will host a conference call tomorrow, February 27, 2020 at 8:30 a.m. Eastern time, followed by a question and answer period.

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.

The conference call will be broadcast live and available for replay here.

A telephonic replay of the conference call will also be available after 11:30 a.m. Eastern time on the same day through March 5, 2020.

Certain financial information reported in this news release is extracted from Ayr’s financial statements as at and for the three and twelve month periods ended December 31, 2019. These results presented herein are preliminary and subject to change. Ayr will file its annual financial statements on SEDAR shortly. All such financial information contained in this news release is qualified in its entirety by reference to such financial statements.

Definition and Reconciliation of Non-IFRS Measures

The Company reports certain non-IFRS measures that are used to evaluate the performance of its businesses and the performance of their respective segments, as well as to manage their capital structures. As non-IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulators require such measures to be clearly defined and reconciled with their most comparable IFRS measure.

The Company references non-IFRS measures and cannabis industry metrics in this document and elsewhere. Non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these are provided as additional information to complement those IFRS measures by providing further understanding of the results of the operations of the Company from management’s perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company’s financial information reported under IFRS. Non-IFRS measures used to analyze the performance of the Company’s businesses include “Adjusted EBITDA” and “Adjusted Gross Profit”.

The Company believes that these non-IFRS financial measures provide meaningful supplemental information regarding the Company’s performances and may be useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. These financial measures are intended to provide investors with supplemental measures of the Company’s operating performances and thus highlight trends in the Company’s core businesses that may not otherwise be apparent when solely relying on the IFRS measures.

Adjusted EBITDA“Adjusted EBITDA” represents income (loss) from operations, as reported, before interest and tax, adjusted to exclude extraordinary items, non-recurring items, other non-cash items, including stock-based compensation expense, depreciation and amortization, the adjustments for the accounting of the fair value of biological assets and the incremental costs to acquire cannabis inventory in a business combination, and further adjusted to remove acquisition related costs.

Adjusted Gross Profit“Adjusted Gross Profit” represents the gross profit, as reported, adjusted to exclude the accounting for the fair value of biological assets and the incremental costs to acquire cannabis inventory in a business combination.

A reconciliation of how Ayr calculates Adjusted EBITDA and Adjusted Gross Profit and reconciles them to IFRS figures is provided below. As well, the Company reminds you that Adjusted EBITDA and Adjusted Gross Profit are non-IFRS measures. Additional reconciliations and other disclosures concerning non-IFRS measures will be provided in our MD&A for the 3 months and year ended December 31, 2019, when filed.

Forward-Looking Statements

Certain information contained in this news release may be forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are often, but not always, identified by the use of words such as “target”, “expect”, “anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “outlook”, “intend”, “plan”, “seek”, “will”, “may” and “should” and similar expressions or words suggesting future outcomes. This news release includes forward-looking information and statements pertaining to, among other things, Ayr’s future growth plans. Numerous risks and uncertainties could cause the actual events and results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking statements, including, but not limited to: anticipated strategic, operational and competitive benefits may not be realized; events or series of events may cause business interruptions; required regulatory approvals may not be obtained; acquisitions may not be able to be completed on satisfactory terms or at all; and Ayr may not be able to raise additional capital. Among other things, Ayr has assumed that its businesses will operate as anticipated, that it will be able to complete acquisitions on reasonable terms, and that all required regulatory approvals will be obtained on satisfactory terms and within expected time frames.

2020 targets, and the related assumptions, involve known and unknown risks and uncertainties that may cause actual results to differ materially. While Ayr believes there is a reasonable basis for these targets, such targets may not be met. These targets represent forward-looking information. Actual results may vary and differ materially from the targets.

Assumptions

Forward-looking information in this subject to the assumptions and risks as described in our MD&A for September 30, 2019. Please see our MD&A for September 30, 2019 for a summary of assumptions underlying our targets for 2020 revenues. For more information about the Company’s 2020 outlook, including detailed financial bridges outlining various growth initiatives, please view Ayr’s corporate presentation posted in the Investors section of the Company’s website at www.ayrstrategies.com. As well, we remind you that Adjusted EBITDA and Adjusted Gross Profit are non-IFRS measures. Additional reconciliations and other disclosures concerning non-IFRS measures will be provided in our MD&A for the 3 months and year ended December 31, 2019, when filed.

About Ayr Strategies Inc.

Ayr Strategies (“Ayr”) is an expanding vertically integrated, U.S. multi-state cannabis operator, focusing on high-growth markets. With anchor operations in Massachusetts and Nevada, the company cultivates and manufactures branded cannabis products for distribution through its network of retail outlets and through third-party stores. Ayr strives to enrich and enliven consumers’ experience every day – helping them to live their best lives, elevated.

Ayr’s leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrstrategies.com.

Net unrealized loss on changes in the fair value of financial liabilities

119,235,147

72,351,356

Stock-based compensation

28,879,225

-

Depreciation

2,172,373

-

Amortization on intangible assets

8,137,864

-

Share of loss on equity investments

72,600

-

Incremental costs to acquire cannabis inventory in business combination

3,764,678

-

Fair value adjustment on sale of inventory

18,272,212

-

Unrealized gain on biological asset transformation

(10,108,105

)

-

Deferred tax benefit

(3,892,570

)

-

Interest accretion

1,652,510

-

Interest income

-

(932,867

)

Changes in non-cash operations, net of business acquisition:

Accounts receivable

(1,308,328

)

-

Inventory and biological assets

(5,809,848

)

-

Prepaid expenses and other assets

(1,459,072

)

(272,021

)

Trade payables

2,992,073

-

Accrued liabilities

(179,574

)

2,195,529

Income tax payable

5,202,943

-

Cash provided by (used in) operating activities

3,573,759

(1,318,485

)

Investing activities

Transfer of (Investment in) restricted cash and short term investments held in escrow and interest income

99,684,243

(7,526,058

)

Purchase of property, plant and equipment

(14,417,635

)

-

Deferred underwriters commission paid

(3,457,154

)

263,415

Cash paid for business combinations, net of cash acquired

(74,714,171

)

-

Cash paid for business combinations, working capital

(547,042

)

-

Payments for interests in equity accounted investments

(500,000

)

-

Advances (to) from related corporation

(809,191

)

120,105

Cash provided by (used in) investing activities

5,239,050

(7,142,538

)

Financing activities

Proceeds from issuance of Class A and B shares

-

8,328,708

Proceeds from exercise of warrants

2,460,150

-

Redemption of Class A shares

(7,519

)

-

Repayments of debts payable

(2,879,329

)

-

Repayments of lease obligations (principal portion)

(763,878

)

-

Purchase of treasury stock

(311,674

)

-

Cash (used in) provided by financing activities

(1,502,250

)

8,328,708

Net increase (decrease) in cash

7,310,559

(132,315

)

Effect of foreign currency translation

982,685

(1,180,907

)

Cash and cash equivalents, beginning of period

109,952

1,423,174

Cash and cash equivalents, end of period

8,403,196

109,952

Ayr Strategies Inc. (formerly, Cannabis Strategies Acquisition Corp.)

Unaudited Condensed Consolidated Adjusted EBITDA Reconciliation

(Expressed in United States Dollars)

Three Months ended December 31,

Year ended December 31,

Annualized2 Year ended December 31,

2019

2018

2019

2018

2019

Loss from operations

(16,898,258

)

(2,341,604

)

(37,467,213

)

(3,241,993

)

Non-cash items accounting for adjustments of cannabis inventory

Incremental costs to acquire cannabis inventory in business combination

3,764,678

3,764,678

Fair value adjustment on sale of inventory

4,838,814

18,272,212

Unrealized gain on biological asset transformation

(1,765,527

)

(10,108,105

)

6,837,965

11,928,785

Interest

295,630

295,630

Depreciation and amortization (from statement of cash flows)

4,511,734

10,310,237

Acquisition costs

724,139

5,847,800

Stock-based compensation, non-cash

13,296,643

28,879,225

Other1

472,326

1,105,694

19,300,472

46,438,586

Adjusted EBITDA (Non-IFRS)

9,240,179

(2,341,604

)

20,900,158

(3,241,993

)

34,518,360

1 Other adjustments made to exclude the impact of non-recurring items.

2 Due to the qualifying transaction completed on May 24, 2019, the 2019 annual results have been normalized by taking the 221-day period and annualizing it to produce a full year of results, whereas the 2018 results represent pro forma consolidated results as reported in the Company’s Business Acquisition Report filed on August 7, 2019.

Ayr Strategies Inc. (formerly, Cannabis Strategies Acquisition Corp.)

Unaudited Condensed Consolidated Adjusted Gross Profit Reconciliation

(Expressed in United States Dollars)

Three Months ended December 31,

Year ended December 31,

Annualized1 Year ended December 31,

2019

2018

2019

2018

2019

Gross Profit

8,285,733

26,256,862

Non-cash items accounting for adjustments of cannabis inventory

Incremental costs to acquire cannabis inventory in business combination

3,764,678

3,764,678

Fair value adjustment on sale of inventory

4,838,814

18,272,212

Unrealized gain on biological asset transformation

(1,765,527

)

(10,108,105

)

6,837,965

11,928,785

Adjusted Gross Profit (Non-IFRS)

15,123,698

38,185,647

63,066,793

1 Due to the qualifying transaction completed on May 24, 2019, the 2019 annual results have been normalized by taking the 221-day period and annualizing it to produce a full year of results, whereas the 2018 results represent pro forma consolidated results as reported in the Company’s Business Acquisition Report filed on August 7, 2019.